What an exotic currency means? Compare Exotic Currencies

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Compare Exotic Currencies

What an exotic currency means?

An exotic currency is a term that is constantly used to mean the currency that is not a major currency and usually makes world forex trades bulk. It is also very thinly traded currency in the stock market. Exotic currencies are usually from some European countries like Norway and Denmark, and developing countries across Asia, Africa, and the Middle East like the Mexican Peso, the Brazilian Real, and the Turkish Lira.

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Exotic currencies are also illiquid. These means, that their security state cannot be easily sold or somehow exchanged or converted to cash without substantially losing its initial value. The illiquid nature of exotic currencies makes them hard to sell at a quicker rate because investors or speculators are not ready and willing to buy these assets. These do not necessarily mean that they are undervalued or weak currencies. It just portrays their unpopularity and limitations in terms of trading activities. For example, the Arabian Riyal (AED) and Kuwaiti Dinar (KWD) are very high-valued currencies in the market.

Exotic currencies in the world

Countries with a small economy are the ones that issue the exotic currencies. These countries are the ones with unstable leadership or government and very inconsistent statistics, and this makes it hard for traders to work with them. The only time the exotic currencies are traded they are usually paired with major currencies like the US Dollar and the Euro.

Some exotic currencies are too small that when displayed they have to be for more than one country. A good example is this exotic currency, CFA Franc BCEAO (XOF). This is the currency of Senegal, Mali, Niger, Togo, Burkina Faso, Benin and Cote d’Ivoire. Another good example of a shared currency that clearly explains what an exotic currency is CFA Franc BEAC (XAF). This the currency for the following countries, Equatorial Guinea, Chad, Cameroon, Gabon, Congo and the Central African Republic.

However, there are also rewards that are associated with the Exotic currencies in spite all the risks and limitations mentioned. When in the stock market, a highly volatile nature is demonstrated with high-value price moves. These moves are short to long term, thus enables investors a huge profit potential as they trade.

Exotic currency companies

There are other benefits one can enjoy when they choose to invest in the Exotic currencies. There are more future complex possibilities one can look at, this includes variants of barrier options, currency options, and currency futures.

Other Exotic currency pairs include;

  • USD/NOK-US Dollar and Norwegian Krone.
  • USD/DKK-US Dollar and Danish Krone.
  • EUR/NOK-Euro and Norwegian Krone.

All these currencies explain what exotic currencies are. They are constantly displayed in more than one currency since the data available may be relatively too small. This will mean that the exchange rate at the market for these currencies which were converted was statistically calculated from cross rates with a major currency like the US Dollar or the Euro. When you come across an exotic currency you notice a statement like, ''Estimated price computed based on the US Dollar rates".

These are just some examples of the widely known exotic currencies in the world:
GEL - Georgian Lara.
IDR - Indonesian Rupiah.
QAR - Qatari Riel.
OMR - Omani Riel.
ETB - Ethiopian Birr.
GEL- Georgian Lara.
GYD - Guyanese Dollar.
KGS - Kyrgyzstani Soma.
IQD - Iraqi Dinar.
XAF CFA - Franc BEAC.
AFN - Afghanistan Afghani.
AWG - Aruban Florin.
AZN - Azerbaijan New Manta.

Compare Exotic Currency pairs available, as some currencies are specialised only a handful of foreign exchange providers can secure.

Exotic Currencies are currency pairs that are rare in trading this could be due to economic restrictions, sanctions on the country, high levels of fraud or a currency that is rarely traded or used.